tv The Communicators CSPAN December 12, 2011 8:00am-8:30am EST
booktv, 48 hours of book programming beginning saturday morning at 8 eastern through monday morning at 8 eastern. nonfiction books all weekend, every weekend right here on c-span2. >> here's a look at what's ahead today on c-span2. next, "the communicators" with national cable and telecommunications association president and ceo michael powell. then newark, new jersey, mayor cory booker talks about why president obama should be reelected. after that, a discussion on the impact of redistricting on congressional and state elections. and later, we're live as british prime minister david cameron speaks to the house of commons following the recent european union summit on the debt crisis. there are. >> this week on "the communicators," michael powell, president of the national cable
and telecommunications association, on key issues affecting the cable and telecom industries. >> host: well, it's been about eight months that michael powell has been president and ceo of the national cable and telecommunications association now. mr. powell, thank you for being on "the communicators." >> guest: my pleasure. thank you for having me. >> host: what would you say is the biggest policy issue that faces ncta at -- during 2011? >> guest: well, it's not that easy to answer because increasingly, a lot of the principle issues that we're focused on are a consequence of conversions and what's coming out of the web. so if you would add up the issues that we've been heavily focused about, a lot of them are our intersection with web issues. so take privacy, an important issue that really has been driven by the headlines associated with facebook or google, but yet they have implications for the infrastructure providers as well. cybersecurity is an important issue to us and growing more
significant by the day, but that also grows out of our anxiety about an ever-increasing online digital economy. you know, the days of sort of traditional section 625 of the telecommunication act dispute, i mean, are much less these days and part of me thinks that's a good thing. but increasingly, we're dealing with issues associate with the the ambiguity of the intersection of the web. >> host: well, there's a couple of privacy ill bills currently working their way through congress. are you supporting or or opposed to any of them? >> guest: weave been very engaged with them. we have a couple of principles that are really important to us. one is we believe over time there aren't going to be as many distinctions between what we do as an industry and what you would call the web doing as an industry. take, for example, interactive advertising or the use of metadata. these are all things that cable industries will want to do as well.
so we're very focused on making sure we're not leavitt out of that -- left out of that equation, that whatever balance is struck in privacy for the web is something that we're able to take advantage of as well. at the same time, you know, we live with legacy regulations that have that same impulse but at a different moment in time. you know, we live by regulatory telecom act rules on privacy that were written, you know, well over more than a decade ago, of course, about 15 years ago that we are very concerned about sort of living under multiple different regulatory regimes that don't really, aren't really congruent. so we're always focused on making sure we can try to harmonize that. >> host: well, let's bring kim hart from politico into our conversation. welcome, kim. >> host: thank you. you mentioned cybersecurity, that's becoming a much bigger issue for you and the industry. where do you, what do you think about the direction that cybersecurity legislation is going and the white house's involvement in how the private
sector should be involved in that discussion? >> guest: i think at the big level it's all healthy and all important, you know? there are various views about a major, comprehensive approach to all elements of privacy. there are others who say let's take off the pieces and move them in -- we're willing to be engaged in any and all of it. we recently were a strong supporter of mike rodgers' bill which is one of the first to get moving, we actually launched it at ncta there with him and his team. we think that kind of thing is critical because the biggest thing is, you know, my view is what you don't know can hurt you, and you have the government who has all kinds of access to information about cyber threat and other roles of national government that aren't shared with or fully appreciated by industries like our own. so his bill where you're able to bring together the ability to share and coordinate information, as long as you're
careful about the need to protect the privacy of consumers, we think that's a really constructive approach. there are other bills and other approaches that are sort of working their way through. i don't think we've taken a strong view that any of them is inherently wrong other than we think that more is not known than known, and be it has to be legislation that can breathe and evolve and doesn't get heavily prescriptive in a way that you're sort of trying to rewrite it every time you learn something new. it could become too straitjacketed if you try to do too much in a rules-specific way. >> host: and in talking about the cable industry still be being under a legislative regime that's more than 15 years old, do you think the telecom act needs to be rewritten in order to better reflect this new age that we're in, the new competitive dynamic? >> guest: i do, but, you know, i'm not one that thinks, oh,
let's start rewriting the telecom act tomorrow. i do think it's fading and irrelevant. i wonder if i took every speech of the chairman of the fcc, julius genachowski, and let's see how many times he's mentioned the words internet versus media ownership or telecom interconnection policies, you know, the core of the '96 act, i think we would find a huge disconnect between the focus of his administration and what's in the statute. the words "internet" barely appear in the telecom act. you've heard this before, we're still regulate anything a very balkanized bucket. you're entitled to a telecommunications carrier, if you're coaxial carrier, you're a title 6 industry provider. but every type and every stripe almost all regulatory questions now are gray because the act doesn't provide clarity, and it
creates jurisdictional disputes, it creates a lot of litigation. there's a heavy inefficiency in the statute. so it's either going to die under its own weight, and it's certainly growing in irrelevancy, i would argue. and at one point i think congress has to migrate us out of it. i think that's my thinking about it, migrate to a bit is a bit kind of regulatory world as opposed to shatter it and try to rewrite the same thing in another four-year, dramatic exercise. i believe you could have a substantially shorter broadband bill that's standards-based, that's more flexible, that sort of rewards companies for investing and migrating to it and let the it collapse under its own weight. >> host: well, peter stern of time warner, strategy chief, was recently quoted as saying that time warner is, essentially, a broadband provider and that television shows that as a cable company provides are simply a convenience at this point. do you agree with that? >> guest: well, embedded in a
statement like that are multiple levels. so from a technology and architecture standpoint, it's certainly true. i mean, a pipe is a pipe now. data is data. zeros and one in one order or pictures of zeros and ones in another order are video in another order, they're telephony conversation. and, again, we have this statute that treats each of those services like a completely different regulatory category, but when an engineer sits down to build an ip data network today, none of that comes into consideration. so, number one, we spent 100 years almost regulating networks based on their technological characteristics. most of broadcasting is premised on this idea you've got to distribute the signal through these community of licenses because it was the only way to get it across the country. today that's not true at all. so from a technological stand point. from a business standpoint if you're a cable operator, increasingly this is the growth part of your business, the higher margin part of your business, it's the part of your
business your consumers increasingly demand and can't do without. it's definitely the 21st century architecture, so you can increasingly see if all applications are just data on my network, then fundamentally you can envision a world in which no matter what service you're providing, you're providing it in the same way you provide web pages or some version of that. it sounds all dramatic and exciting to say tv's an app. tv's a compelling service that people like. it'll morph in the way it's delivered, in the way consumers interact with it, it'll morph in if way consumers will be able to layer things on to it, but i think cable will still be in that business for a long time. >> host: so how does spectrum enter that equation? that's been such a huge part of what the fcc's agenda has been and its efforts to increase broadband and make sure that adoption and expansion happen in a timely manner. how does the cable industry see spectrum playing into its own business model going forward,
especially with this new teal with verizon -- due with visen in. >> host: it's an important and challenging question. let's not call it spectrum because that's sort of geeky and resourceful, but the real issue is you have capabilities you increasely want to provide as part of the consumer experience, right? we want anytime, anywhere. we're all quick to say my children demand a world in which they can move around, do the following things. what you're really saying is you need to have a point function to services you're providing you want to export your experience so you're not an industry tether today a time, place and location. so spectrum or mobility's critical to that. the second thing is wireless has become the home networking standard. i mean, increasingly my house is littered with things that talk to my wi-fi network and use my broadband connection to bring things to life in my home without having to tear up my house. i have a music system that runs
on wi-fi, my tivo downloads data that runs, i even bought this cool new thermostat, and i can change it while we're sitting here. i think that is an important part of the consumer experience, you have to use wireless to blew their stuff together. i think that's a really important function that wireless serves. i think any industry in the information space has got to be working on a wireless or mobile strategy, and i think the third thing important to do is how do you take advantage of, say, steve jobs' -- god rest his soul -- genius, right? how do you make sure you get to be a part of the quites and the -- devices and the gadgets that delight consumers? when the tablet comes out, how are they going to be sure they get to be part of that emotional connection? to do that, you'd better be able to communicate your service over the architecture that thing uses. that thing uses wi-fi or 3g, going to 4g.
so if you can't come over that platform to that device, you're cutting yourself out of that innovation curve. so, um, i think increasingly what the cable industry's kind of coming to the conclusion, what i think the deal represents, um, we have a strong interest in wireless, but we probably are not well positioned to be a terrestrial, cellular tower-based wireless company. that's a really hard business. and, you know, the biggest mistake i've seen companies make is think entirely new businesses are just extensions of their product line. i've watched companies destroy themselves over and over again making that mistake. long distance companies that thought going into local was just an extension of what they were already doing. no, it's an entirely different business. wireless is an entirely different business. it takes a lot of capital, a lot of expertise, a lot of employee-based that's capable. so i think those are relatively wise and reflective choices on those companies' parts, but no
one should read that as somehow they're done with wireless. it's just that they'll start to focus more on wi-fi, extending their experience out of home, extending their experienced devices and maybe partnering with terrestrial devices where necessary as we see in that deal. >> host: and with the partnering situation that is part of that deal, will it disincentivize the wireless and cable companies to actually compete against each other if they're partnering up to sell each other's products? >> guest: yeah. i think it's a good thing to be talking about. i think there's more that we don't know than we do know. there are few people who have seen the depths or the details of what they've agreed to. i don't know the full extent of what they mean, so everybody right now is sort of reporting off of, you know, small bits of what we supposedly know. and, you know, we've seen lots of joint marketing arrangements over the years, you know, in teleco companies. i haven't seen that many of them that turn out to be enormously
powerful, disruptive sources and changing fundamentally the competitive dynamic. i would point to you, for example, someone says, well, verizon's not going to compete withcom cast anymore, with fios, for example, and the next day the new story was verizon's going to launch a netflix-like web streaming service to compete out of the very market they said they might be cross-marketing with comcast in. this market never stops surprising me. it is a gyrating, met more to sizing space that every time i turn around is twisting into some new direction. but i think the competition is more fierce than generally recognized, i don't think it goes away because i think the products are so compelling, the experience of the consumer's so come poling, it's -- compelling, it's a tough market to say i'm completely irg plant of. ignorant of. they'll care about it on their wireless platform, they'll care about it as a broadband service
provider, and it's still, you know, americans are watching 146 hours of television, i mean, still an enormously-consumed service. so we'll see, i don't really know the answer, and there'll be a lot of discussion about it. >> host: specific chi to follow up on kim's question, how does the fact that time warner, comcast are now planning on selling spectrum to verizon, how does that change the telecom landscape? >> guest: well, i think the biggest implication for it is one that's not directly our issue but will continue to be an issue for the country which is sort of what do people think is the acceptable market structure of the wireless market, right? right now you have at&t/, the mobile -- t mobile sort of raging, concerns about growing concentration. you know, i think these are -- i'm not subscribing to any one of these views because i think it's a much more nuanced picture
than is generally credited b but verizon's the number one wireless provider, and it just got more spectrum. at the same time, for example, if you look at the fcc's screen for anticompetitive concern, you know, i've read that only three out of the 100 markets that they're in would even trip the screen. so, you know, is it so much or too little? but there's going to be a lot of anxiety around the gyrations going on in the wireless market both because of spectrum stability, because two of the companies are struggling and because 4g has to be deployed. and be there's like this palpable excitement that this is an area where america's leading and could do very, very well and want to continue, and i think some of that's the iphone, in fact, right? we've seen the power of the platform. there will also be some discussions about what's the migratory path of traditional wired broadband just because these are both companies, also n that space. >> host: do you think that wired and wireless companies and
platforms should be regulated the same? are they still fundamentally different? >> guest: there's no simple answer to. that i wish there was. it depends on what we're talking about. my view is when you regulate in a converging world, you should try your best -- i don't always say it the same -- they should be harmonized, right? you should be trying to insure that it's harmonized across architectures because they are increasingly trending toward being more similar, not more different. and, you know, you run the risk of inadvertently providing a competitive advantage or disadvantage to one by inadvertently burdening one over the other, so, you know the story. but i would say harmonization rather than being identical because they do have characterrististics that are bottom line impacting. the cable industry has a critical resource built with
private capital and goes out and builds and constructs. verizon or a wireless company has to come to the government and get it most critical asset which the government actually doesn't really sell you, it leases you on lender license terms under certain terms and conditions. so it's a very different regulatory conversation than we have with them on the terrestrial side. there are also other problems that are by nature of technology. i mean, jd powers is out this week citing quality studies. consumers have a higher intolerance about dropped calls, network congestion is a different issue as the way it plays out in wireless than it is in the wired space. so i would think an enlightened regulator should be very attuned to the differences and not act with one sledge hammer like they're treated the same. but if they're really good, they're trying to make sure they're not creating an irreconcilable conflict. >> host: this is c-span's
"communicators "program, our guest is michael paul, served -- powell, served as chairman of the fcc from 2001 to 2005. kim hart with politico, senior technology reporter, is our guest reporter. >> host: thank you. the fcc spent most of the fall dealing with the universal service reform which ncta was pretty involved in and put a lot of input into that proceeding. one of the biggest proceedings that the cable industry had was the so-called right of first refusal provision, that was part of that which you thought gave an unfair advantage to incumbent phone providers rather than cable providers in being able to receive a subsidy to build out their broadband networks. talk about how you see that really affecting cable's interests in these rural areas where it's hard to reach, and is this something that you see small cable companies potentially suing the fcc over? is it that big of a deal for you? >> you know, cable's very proud to say that, you know, we've
been through three or four cycles of the government's newfound infatuation with competition over natural monopoly, right? if you think about it, for 100 years in the united states we essentially had a belief that all of these industries were naturally monopolies, and the government actually sanctioned them. we forget these were not monopolies created in the marketplace. at&t did not become the sole phone company because it just beat everybody, it did because the government made a deal. interestingly enough, the deal it made in the early 1900s was something called universal service. the deal was in exchange for you being allowed to be the sole provider without fear of antitrust response, um, is you agree to serve the country with ubiquitous and affordable service. in fact, the term universal service was first coined by the ceo of at&t, part of a very nice political gesture to get rid of antitrust scrutiny in exchange for this concept of ubiquity and
affordability. and for now 100 years i think the universal service program has been built naturally as it was from the beginning as a system that presumes the presence of a market monopoly and one who the social objectives of the program are achieved by allowing that monopolist to cross-subsidize service; charge more for long distance, make local cheap. and why does the monopolist care? because i'm just sloshing money from one bucket to the next bucket. first with the divestiture in '84 and then in '96 when the country said, you know, we've changed our mind. the problem is you have companies going in to compete in markets, but we compete against an incumbent who has all kinds of guaranteed government subsidization through this program. if you're a rate of return carrier, you have a guaranteed profit, guaranteed by the united states government and state governments all over the country.
but yet we don't. we have to make a profit from a market base. we have to borrow capital in the private markets, a rate of return can egoto the rural utility services. these are just forces you can't compete with, so as an industry committed to the competitive principle, we wanted to see more of that eliminated. like let's, you know, we agree with the government subsidizing the hardest-served areas, but if everybody who wants to compete wants to show up and try, why should the government, once again, sanction a privilege for incumbency? and the only argument that really won out to the extent that it won out there was because they're already invested and, god forbid, they should have to lose some money as part of this government dislocation. it's really a political problem, not a policy problem which is who's got enough courage to do the right thing even if it comes at someone's financial expense? so, you know, we weren't happy with that. i mean, i think, again, right of first refusal, why should the government give anybody that
right because that's not for the consumer let us compete and whoever serves the consumer best gets it. is it important to us? yes, it's important to us. particularly, we have companies that serve communities of 50 people, and they're out there fighting gwen -- against some rural incumbent that has all this advantage. i don't know that we would sue, certainly as an association we haven't reached that conclusion in any way, shape or form. we're generally happy, and i actually think it's one of the real things to commend this commission for. it's tough, complicated. myself and other chairmen have broken their pick trying to do it, and i think genachowski's smart to be trying to migrate that to broadband, again, away from the traditional service approach that we've used. >> host: kim hart? >> host: talk a little bit about the retransmission convent debate that has kind of been brewing for some time now and what that means for your industry especially now that the
landscape has changed so much and what companies own each other, where the content is coming from. and i know you have companies in your membership that are on both sides of that debate, so how do you handle that? >> guest: so we have this legacy environment in which the government had a very intimate relationship with particular industries because there were particular social objectives it wanted to achieve. just like usf is one of them in the telephone space, the biggest one in the media space is broadcasting. the premise that the country made a social compact with the commercial broadcasting industry, that it would provide free over-the-air video services with serving the public interest needs of the local community and that in exchange for this they would get free spectrum and other -- and must-carry rights and all kinds of other government-conferred benefits as a consequence of that social compact. i've always been cynical of social compact. i think it proves more theoretical than real, and i
think a lot of horse trading goes on as to whether there are real burdens associate with the that or not. but that's another story. you have major entertainment companies that have come out and then have added cable programming and studios, and now they're very substantial, well, you know, well-funded, effective media companies who, by the way, provide phenomenally good programming and want to come into the market and negotiate for fees based on their value just as cable programmers do. but, of course, a little bit of a disconnect is that they enjoy certain kinds of elements in their negotiations that are by virtue of this sort of broadcast social broadcast premise which, arguably, isn't really, you know, there or fair. so that's one part of it. there's history here, and the history has led, um, you know, allowed some of these countries to build -- companies to build into the important companies they are today.
that said, i think that it's a little overblown, the retransmission consent space. because when we say that, we say, well, what are the very specific rules and would they radically change the nature of that relationship? a little bit, but probably wouldn't get at the heart of what the growing challenge in the industry, and you've seen articles yesterday about sports programming. something like that goes far beyond the media industry that is either espn or -- i don't know why we pay alex rodriguez $250 million. sports money is freakishly high. and, you know, is there a limit? there are report that is the nfl wants 60% increase in media rates, and where's the antitrust protection? most of those industries are exempted from the kind of constraints that would normally not be permitted. the nfl, which i think is one of the finest-rub businesses in america, but they also negotiate
on behalf of the entire league, it's one package, you can't play one off the other. there are good reasons why they do that. it's one of the smartest business models out there. but, look, that leads to an ever-escalating problem with fees that have to be funneled through the system. and i think the challenge -- and there are other program cost pressures like that too. the challenge is, you know, that's absorbed fist by, say, an espn who has to recover it costs from an operator who then ultimately wants to recover costs from the consumer, but they're going to have to be part of that subsidization. that's okay up to a point. is there some point though where it sort of breaks the compact? like, it's too much? and i don't know. i mean, i think the anxiety in people's hearts and minds is maybe not today, maybe not tomorrow, maybe not even next year, but gosh, this seems like an infinite trajectory that at some point we can't absorb, and what happens when we cant?
to be honest with you, kim, a lot of people are having important conversations because of these rising anxieties as opposed to being debated as a specific regulatory issue. by the way, i think many of them have very healthy conversations about how do we cope with this problem, and how do we try to migrate ourselves to a better place. time warner's experimenting with smaller packages, working with their programming partners, you've seen companies work out things like hbo go. so i think that there's a healthier round of this than in the past where it's some government-initiated, you know, attack on cable pricing or a la carte. but more of a kind of rich business discussion about the trend lines. >> host: time for one more question, kim hart. >> host: since you have been in the chairman's position over at the fcc and republicans are really working hard to try to implement some reforms of how the agency works, judging from
your experience at the agency, do you think that process need to be reformed at the fcc? >> guest: well, um, i think there are elements of it that do. um, some of it, though, the -- the big stuff would be harder than it sounds. so on the one side where i've always been critical including during my own tenure, the fcc doesn't really have a rules of procedure book. every court in america has a rules of procedure book, i think there are other agencies that have a very clearly published set of rule about how things are done; when you vote an item, how long an item once it's voted, you know, is considered finished, when can commissioners bring an item from the bureau up on delegated authority. i mean, there are millions of daily questions about policy and process at the fcc that a have no kind of, you know, rule book answer. so the industry doesn't have a lot of